So there’s a second professional study, this one from the Institute on Taxation and Economic Policy, that says a state income tax will hurt Alaskans a lot less than a whack of their PFDs:
Most Alaska households would pay less under a graduated rate personal income tax than they would under a payroll tax, sales tax, or a cut to the PFD payout designed to raise the same amount of revenue. This finding holds true across at least the bottom 60 percent of the income distribution, and for some families above this level.
. . . . .
Cuts to the PFD payout are the most regressive option examined in this report, followed by a statewide general sales tax. A PFD cut would impact the bottom 20 percent of earners nearly 10 times as heavily as the top 20 percent, when measured relative to family income. A statewide general sales tax would also be regressive, costing low-income earners more than three times as much, relative to their incomes, as high-income earners.
If you read the whole report, the evidence is overwhelming. Only the top 5% of earners would consistently be hit harder by a state income tax.
Readers may recall that an earlier study by University of Alaska’s Institute for Social and Economic Research — ISER — found dividend reductions to be far more costly to Alaska families with children than a progressive income tax. So now there are two separate studies, both saying a reduction in the PFD is a bad idea and that a statewide income tax is much less harmful.
So what does the state senate want to do? Slash the PFD and finance the budget deficit out of the Permanent Fund, permanently reducing everyone’s PFD. It takes a hopelessly rose view on recovery oil prices. And makes even more drastic cuts in the state budget without having the balls to say where. You can read Elise Patkotak’s excellent take-down if you want the smarmy details.
But that’s all background to a discussion of Senator Pete Kelly’s utterly disingenuous recent opinion piece. He titled it, “The coming snowstorm taking aim at Juneau,” but the snowstorm is to be found in Senator Kelly’s opinion piece.
He ignores the two studies saying otherwise, and, without any evidence, suggests an income tax is more harmful.
He equates consumption taxes – like taxes on tobacco and alcohol – with an income tax. The tobacco and alcohol tax reduce consumption of those things; an income tax will similarly reduce income, Senator Kelly claims. Really? An income tax will make people work less and therefore earn less? Can Senator Kelly point to a single economic study that supports such an idea? Even one?
He won’t because he can’t. There’s an income tax in Idaho; WC hasn’t notice anyone working less there. There’s an income tax in California; those folks work pretty hard. Senator Kelly is spouting errant nonsense.
He even more or less admits it’s hokum, shifting instead to an attack on the media, the “beautiful television people” and “the cynical press or the bureaucratic institutions.” That’s not an argument. That’s aping the Trumpster by indulging in ad hominem fallacies; it’s a drive-by verbal shooting. Senator Kelly would be better served to address the issues.
Senator Kelly closes with the biggest whopper of them all. He says,
The members of the Alaska Senate majority are fighting for you, for your paycheck and for your job.
If Senator Kelly could find a way to bag and sell claims like that he’d make a fortune in fertilizer sales. What matters is total income per household. The PFD and income less that 2.4% income tax, two studies have found, are more than income with no tax and a sharply lower PFD. Put another way, the PFD cut is more than the bite of income tax. Senator Kelly is just lying. Again.
And as for implying a threat to jobs? Pure F.U.D.: fear, uncertainty and doubt. The overwhelming majority of states have an income tax and no loss of jobs. Shame on Senator Kelly for flat out deception.
The only thing standing between you and an income tax is the Senate.
That last statement is sadly true, if not in the way Senator Kelly intended. Because Senator Kelly and his fellow Republicans are also the only thing standing between a balanced budget with a chance of prosperity and a worsening recession.
Stupid, stupid, stupid.